Tuesday, 16 May 2017

Tory paternalism and gambling

Philip Blond at ResPublica is the latest to join the moral crusade (gravy train?) against fixed odds betting terminals (FOBTs). These are the machines in betting shops that have become controversial thanks to the Campaign for Fairer Gambling, a pressure group set up and lavishly funded by the casino tycoon Derek Webb.

I first wrote about FOBTs back in 2013 after hearing several claims that were patently untrue. Whatever anti-gambling campaigners might say, there has been no proliferation of betting shops in the last decade, no rise in problem gambling, and there is no evidence that FOBTs are more 'addictive' than other forms of gambling.

The claim that FOBTs are the 'crack cocaine of gambling' has no basis in fact; this catchy phrase seems to have been coined by Donald Trump in the 1980s when he was lobbying against electronic gambling to protect his casino business. This is apt since the whole anti-FOBT enterprise is firmly 'post-truth'.

Blond's blog post is titled 'A stake in it for everyone; why Conservatives should support regulation of Fixed Odds Betting Terminals'. This implies that FOBTs are currently unregulated. This is obviously untrue. There are strict limits on where they can be played (betting shops and casinos, basically) and there are all sorts of other regulations - age restrictions, stake limits etc - in addition to extensive self-regulation. When Blond says 'regulated', he means 'de facto banned' since he wants stakes to be reduced by 98%, from a maximum of £100 to just £2.

If the stake was reduced to £2, people would not play them. FOBTs are not jackpot machines. You need to put a reasonable amount on to win a reasonable amount. Non-gamblers don't always seem to understand this, as I explained in my briefing paper last year...

To a non-gambler, it might seem incongruous that FOBTs have a stake limit of £100 when other gambling machines have a limit of £1 or £2, but this only reflects the different nature of the games. Fruit machines with a low stake have jackpots which allow up to £500 to be won in a single spin. FOBTs, by contrast, do not have jackpots. In blackjack, a winning player can usually do no more than double what he has staked. The same is true of a roulette player betting on red or black, or odds or evens (the exception is when the player bets on a single number which returns at a rate of 36:1, but since FOBT payouts are capped at £500 it makes no sense to place more than £13 on such a bet).

Given the 1:1 payout ratio, there would be little excitement in betting £2 to win £2 and therefore the stake is considerably higher on FOBTs. In most casinos, the minimum stake on blackjack and roulette is £5 and it is often as high as £10 or £15. Any cap on the maximum stake can only ever be arbitrary, but it must be set high enough for players to get a sufficient sense of risk and reward to make the games satisfying.

The so-called Campaign for Fairer Gambling know that reducing the stake to £2 will - to quote the name of their other group - 'Stop the FOBTs'. It's not regulation. It's prohibition in all but name, like allowing beer no stronger than 0.5%.

Blond says...

FOBTs or B2 machines are highly addictive, one way we know this,
according to research conducted by the Campaign for Fairer Gambling, is
that FOBT users are much more likely to be ‘problem gamblers’,
statistics from the gambling helpline
showed that in one year (2011/2012) 28% of calls to the helpline were
from gamblers who were experiencing problems owing to their use of
FOBTs.

I wouldn't trust research from the Campaign for Fairer Gambling as far as I could throw it, but even if this six year old statistic was true, it does not prove that FOBTs are addictive or that their users are 'much more likely' to be problem gamblers. The mere fact that problem gamblers play the machines tells us nothing. Problem gamblers tend to engage in lots of different gambling activities, including the lottery.

The original conclusion that there is no consistent evidence that
particular gambling activities are predictive of problem gambling, after
controlling for the level of involvement, holds true in 2010 and 2012.

The 2007 finding that machines in bookmakers are the exception does not persist into 2010 and 2012.

Playing the Tory card, Blond bashes one of the few good things the last Labour government did - dragging gambling regulation into the 21st century.

This liberalisation has not delivered economic prosperity. Research
carried out by Landman Economics has found that gamblers have lost £11
billion on FOBTs since 2008, this money generates little return for the
productive economy because such machines reduce the staffing needs of
betting shops and the cost of gambling itself reduces disposable and
non-disposable income for individuals and families who fall into the
‘just about managing’ demographic.

People don't 'lose' money on gambling. They spend it. It's a form of entertainment and people should be able to spend their money on whatever the hell they like.

Moreover, jobs are a cost. If we ran the economy on the basis of maximising job creation, we would go back to feudal agriculture. Bookmakers are just as much a part of the 'productive economy' as theatres, football clubs and pubs. So, too, are the other parts of the gambling sector which Blond curiously fails to criticise.

FOBTs only account for 13.6 per cent of total UK gambling spend. The largest sector of the industry is online and that it where gamblers will go if anti-FOBT campaigners get their way. With bookies making half of their revenue from FOBTs, it is safe to assume that many of them will close down if the stake is dropped to £2. The jobs of those who work in them will then be lost to offshore online gambling firms, so spare me your mock-concern about employment.

During the General Election it is vital that we redouble our efforts
to make the case for a less liberalised and more highly regulated
gambling market, an endeavour that reflects conservative tenets of
family, community and prosperity.

Less liberalisation and more regulation are conservative tenets now, are they?

Our high streets should be at the heart of our economic and social
fabric, providing places of work and places of collective expression.

Bookmakers are both places of work and places of 'collective expression'. Some people like gambling. Get over it.

The disproportionate growth of betting shops, that have come to dominate
some high streets, runs counter to that aspiration and has in part been
fuelled by the exponential growth in low-cost, low-maintenance FOBTs.

The graph below shows the number of bookmakers in Britain since 1961.

Can you see any 'disproportionate growth'? No. It's another anti-FOBT lie. The whole crusade is castle built on sand.

About Me

Writer and researcher at the Institute of Economic Affairs. Blogging in a personal capacity.
Author of Selfishness, Greed and Capitalism (2015), The Art of Suppression (2011), The Spirit Level Delusion (2010) and Velvet Glove, Iron Fist (2009).

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."